Albertsons' $4B Dividend Never Endangered Grocer, Ex-CEO Testifies

Albertsons had plenty of cash when it paid out a $4 billion special dividend in January 2023, and its fiscal health stayed solid afterward, former CEO Vivek Sankaran testified Monday in the Delaware Court of Chancery.

The testimony opened a trial over which company is to blame for the collapse of the Kroger-Albertsons merger. Sankaran, no longer at Albertsons' helm, directly rebutted the argument that the dividend weakened the grocer's ability to compete — the core claim state officials made when they sued to stop the payment.

That fight had teeth. Attorneys general from Washington state, California, Illinois and Washington, D.C., sued to block the distribution, arguing the payout would hobble Albertsons competitively. A judge temporarily halted the payment, which Albertsons had planned for early November 2022. Albertsons won in the end and began distributing the funds two months later.

What did Kroger's lawyer put on the record?

Under cross-examination, Kroger's attorney confronted Sankaran with evidence that the dividend — described in the merger agreement as a "pre-closing dividend" — drew opposition from nearly every direction.

The lineup, as presented in court:

• An October 2022 letter from the Federal Trade Commission to attorneys for both companies, flagging that the agency was examining the dividend's timing and that the payment might affect its review of the transaction.
• A December 2022 letter from Southern California labor leaders objecting to the dividend and asking Albertsons to delay it.
• An Oct. 25, 2022, letter from Sens. Elizabeth Warren and Bernie Sanders and Rep. Jan Schakowsky to then-FTC Chair Lina Khan, urging the agency to oppose the merger partly because of the "unusual circumstances" of the dividend.

That's three separate pressure campaigns in roughly three months. Sankaran's answer was procedural rather than financial: Albertsons and Kroger worked together to gain clearance for the payment, he said, and he concluded that scrapping it could have created legal problems of its own.

Walking away from $4 billion, in other words, carried its own bill.

How did the case get here?

The timeline matters for anyone tracking the grocery industry's biggest failed deal in years. In February 2024, the FTC and nine attorneys general filed a federal lawsuit to stop the merger on anticompetitive grounds. On Dec. 10, 2024, a federal judge in Oregon and a state judge in Washington both blocked it. Albertsons terminated the agreement the next day and sued Kroger, accusing its would-be partner of mishandling the merger-review process.

Now each side is painting the other as the author of the collapse. Sankaran's opening-day appearance signals Albertsons will lean on its balance-sheet strength and its cooperation with Kroger during the dividend fight. Kroger, for its part, is assembling a paper trail showing Albertsons pushed forward with a payout that regulators, lawmakers and unions all flagged — a payout that arguably complicated the very review process Albertsons now says Kroger botched.

What does this change for the industry? The trial's outcome will determine who pays for a dead deal that spanned two presidencies' worth of regulatory scrutiny, and whether the $4 billion dividend becomes evidence of prudence or of self-inflicted damage.